Disney Interactive to cut about 700 jobs

Disney Interactive, the struggling video game and digital media subsidiary of Walt Disney Co., is cutting roughly 700 jobs worldwide, the company said Thursday. The division is closing offices in Chicago, New Jersey, Colorado, South Korea and Hyderabad, India. The layoffs represent about 26% of the division’s workforce. Disney Interactive said in a statement that it “has consolidated several lines of business as part of an effort to focus the division on a streamlined suite of high quality digital products. “As a result of this restructuring, we have undergone a reduction in workforce. These actions were difficult but necessary given our long-term strategy focused on sustainable profitability and innovation.”

Disney Interactive, which lost more than $200 million a year between 2008 and 2012, is in a period of transition. The division parted ways with Co-President John Pleasants in November, just months after the successful launch of its “Disney Infinity” video game. The planned cuts were reported by The Times and other outlets in February.

In February, Disney Interactive reported operating income of $55 million for its fiscal first quarter, compared with $9 million a year earlier. Revenue was up 38% to $403 million. Disney attributed the division’s success to “Disney Infinity,” which has sold more than 3 million copies since launching in August.

Robert A. Iger, chairman and chief executive of Disney, said on a conference call with analysts in February 2013 that “profitability at Disney Interactive has been a goal of ours in 2013.” However, the division lost $87 million for its fiscal 2013, which ended Sept. 28.

“Disney Infinity,” released in August after a years-long development process that cost Disney about $100 million, is available on multiple platforms, including PlayStation 3 and Xbox 360. It incorporates physical toys into the game play. “Disney Infinity” is sold in a $75 bundle that includes the game, three figurines and the base that connects the physical toys to the onscreen action.

The game includes popular characters from the company’s films, including Buzz Lightyear and Woody from Pixar’s “Toy Story” franchise and Capt. Jack Sparrow and Barbossa from the “Pirates of the Caribbean” movie series.

The layoffs follow other recent cuts. In January 2013, Disney Interactive cut 50 jobs and closed Austin, Texas-based Junction Point Studios, the developer responsible for the “Epic Mickey” titles. In January 2011, the company shut down Propaganda Games, the development studio responsible for the “Tron: Evolution” video game, and laid off about 200 people.